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TANF 101Working Poor Families Project

June 20, 2013

Elizabeth Lower-BaschSenior Policy Analyst

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What is TANF?

Temporary Assistance for Needy Families

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TANF Block Grant and MOE

TANF Assistance and Work Activities

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TANF: The Block Grant

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• 1996 “welfare reform” replaced AFDC with TANF.

• Fixed block grant ($16.5 billion a year) and maintenance of effort (MOE) requirement replaced uncapped matching funds Value of block grant has fallen by > 30% due to inflation

• Block grant can be used for broad range of activities aimed at 4 goals of TANF: assistance to needy families, but also job preparation, work, marriage, reduction of out-of-wedlock pregnancies

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Use of Funds

• Supports a range of activities: Cash assistance and work programs Child care, early education and youth programs Emergency assistance and state EITCs Child welfare

• Limited to “needy families” with children, but not just to families receiving cash assistance States define income limits for “needy families” Non-custodial parents, youth may be part of “families”

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Maintenance of Effort

• Can include wide range of state/local spending on low-income families

• Can include “third-party MOE” – nonprofits, employer costs related to subsidized employment

• Incentive to claim all possible spending MOE requirement – 75 or 80 percent Contingency Fund “Excess” MOE can increase caseload reduction credit

and therefore lower work participation rate target

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Reported MOE is Rising

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Does not mean actual spending has increased

GAO-13-431

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Basic Assistance is a Smaller Part of TANF and MOE Spending

1997 Spending 2011 Spending

Basic Assis-tance29%

Child Care Spent or

Transferred17%

Transferred to SSBG3%

Other and Au-thorized Under

Prior Law***19%

All Work Re-lated**

8%

Refundable Tax Credits

8%

Pregnancy Prevention

6%

Admin and Systems7% Remaining Categories*

2%

* "Remaining Categories" includes "Transportation or Support Services" and "Two-Parent Promo -tion"** "All Work Related" includes "Other Work", "Education and Training" and "Work Subsidies"*** "Other and Authorized Under Prior Law" includes "AUPL All" and "Other Nonassistance"

Other Nonassistance, 0.1% Remaining Categories; 1.9%

Basic Assis-tance; 70.9%

Administra-tion and Sys-tems; 9.1%

Work-Re-lated Activi-ties; 3.6%

Child Care Spent or Trans-ferred; 5.4%

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Assistance Caseloads Have Declined

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Range of Reasons for Caseload Decline

• Very low eligibility thresholds

• Up-front “diversion” programs and sanctions

• Time limits• “Not worth it”

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GAO estimates 87 percent of decline is due to non-participation by eligible families

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0%

10%

20%

30%

40%

50%

60%

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Work and Welfare Among Poor Single Mothers, 1987-2010

Welfare, No Work

Work and Welfare

Source: CRS, Trends in Welfare, Work, and the Economic Well-Being of Female-Headed Families with Children: 1987-2010 (December 20, 2011).

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TANF Work Participation Rates

• 12 countable activities – restrictions apply to counting of education and training

• Recipients must average 30 hours per week of work participation, 20 hours per week if single parent of child under 6

• No partial credit• Daily supervision and documentation

requirements

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TANF Work Participation Rates

• Target rate is 50 % for all families, 90% for two parent families

• Actual rate has been about 30% for country as a whole 2000-2009

• States vary widely, but most states have “passed” due to caseload reduction credit, excess MOE

• States failing in FY 2009: California, DC, Guam, Maine, Missouri, Ohio, Oregon, and Puerto Rico

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Deficit Reduction Act of 2005 Increased Focus on WPR

• Technical changes with far-reaching impacts Loss of caseload reduction credit (CRC) States can not use “separate state programs” Federal definitions of work activities Increased requirements to verify and document actual

hours of participation (not just scheduled)

• Pressure on states to focus on federally countable activities

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Additional States at Risk Due to Tighter Rules for “Excess MOE”

Many States Used Additional State Spending to Meet WPR

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• Revised rules took effect in FY 2008

• But, Recovery Act rules allowed states to use FY 2007 WPR for FYs 2009, 2010 and 2011

• In many states, FY 2012 will be the first year under new rules.

GAO-11-880T

MOE+CRC+Work

CRC + Work

Work

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e.g. Washington State

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WA WorkFirst Performance Chartbook Feb 2013

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Federal Threats and Opportunities: Use of Funds

• Improved reporting requirements• Restrictions on what can be claimed

Third party MOE Limits on definition of “needy” Limits on use of funds for child welfare, pre-k,

scholarships?

• Revised contingency fund Focus on subsidized employment?

• Possibility of cuts to block grant??

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Federal Threats and Opportunities:Work Requirements

• GAO report presents a range of options Eliminate/cap caseload reduction credit Eliminate “excess MOE” as part of CRC Employment credit Reduce documentation requirements Add countable activities, or remove limitations on

education and training Replace work rate with outcome measures

• Waiver opportunity

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TANF Education and Training

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Limits on Education and Training

• Four categories of education and training: vocational education (12 month limit), job skills training, education related to employment, and satisfactory school attendance (teens)

• Up to 30% of recipients counted in rate can be in full-time education and training focused activities (voc ed training and satisfactory school attendance)

• Job skills training, education related to employment can only count when combined with 20 hours/week of “core activities”

• Basic education can count when embedded/integrated HHS guidance discouraged sequential approach

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Little Opportunity for Education and Training

Unsubsid

ized em

ploymen

t

Job searc

h and re

adiness

Vocational

educati

onal tra

ining

Work

experi

ence

Community se

rvice

job skills

relat

ed to

employm

ent

Seco

ndary Sc

hool Atten

dence

Educati

on relat

ed to

employm

ent

Private

subsid

ized em

ploymen

t

Public su

bsidize

d employm

ent

On-the-j

ob train

ing

Provid

ing child

care

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

19.1%

5.0% 4.5%2.6%

1.7% 1.1% 0.9% 0.4% 0.4% 0.3% 0.1% *

Percent of Families in the Participation Rate En-gaged in Activity: FY2009

Source: Congressional Research Service (CRS) based on data from the U.S. Department of Health and Human Services (HHS). * = Less than 0.05%.

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Most States Are Well Under 30% Cap

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HAWAII

VIRGINIA

MASSACHUSETTS

ALABAMA

ALASKA

TENNESSEE

NEVADA

DELAWARE

VERMONT

NEBRASKA

MISSISSIPPI

MISSOURI

TEXAS

MAINE

NEW MEXICO

WISCONSIN

WYOMING

MARYLAND

NORTH CAROLINA

OHIO

KANSAS

OREGON

KENTUCKY

WEST VIRGINIA

PENNSYLVANIA

NEW JERSEY

LOUISIANA

-10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

CLASP Analysis of FY 2009 Work Participa-tion Rate Data. Sum of share of participants re-ported in vocational education and satisfactory school attendance.

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Why Work First?

• Some states don’t think they should support education and training Ideology: work not education 1990s JOBS evaluation is interpreted as “education

doesn’t work”

• Some don’t think they can allow education and training Federal limits on what can be counted Concerns about documenting hours

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False Choice between Education and Training and Jobs

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More than Half of TANF Adults are Under Age 29

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6.9

25.3

21.8

TANF Work Eligible Individuals by Age

Under Age 20 20-24

25-29 30+

CRS analysis of FY 2009 national TANF data https://www.fas.org/sgp/crs/misc/R42768.pdf

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TANF Rules for Young Adults

• Minor teens (under age 18) must live in adult-supervised setting and attend school.

• Teen parents (under age 20) can be counted as engaged in work if they maintain satisfactory attendance at secondary school or

the equivalent during the month; or participate in education directly related to employment

for at least 20 hours per week

• CRS finds 42 percent of minor teens w/o HS degree counted this way, but only 10 percent of 19 year olds.

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Not Your Parent’s Basic Education

• High intensity, with clear connection to workforce goals Focus on credentials with economic payoff Even participants with low basic skills start working on

vocational skills quickly “Stackable” credentials minimize tradeoff between

short-term and long-term goals

• Addresses students’ overburdened lives Supportive services Flexible scheduling

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TANF Recipients Benefit from Degrees

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Lesley Turner The Returns to Higher Education for Welfare Recipients: Evidence from Colorado

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Counting Education Toward the TANF Participation Rate

• Up to 12 months of “vocational education” as stand-alone activity (for up to 30% of recipients in rate)

• After 12 months, can be counted as job skills training, education related to employment -- but only when combined with 20 hours/week of “core activities” (work or community service)

• All hours of participation must be documented

• One hour of homework can be counted per hour of class time

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Strategies

• Document hours of participation in ways that do not burden, stigmatize students

• Minimize gaps in participation – either by reorganizing schedules, or adding wrap-around programs.

• Count work-study, internships, practicums, co-ops as subsidized employment or work experience, to preserve 12 months of full-time participation

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Beyond the WPR

• States can allow non-countable activities Some states have enough caseload decline that they

don’t have to worry about WPR States can use solely state funds (not MOE)

• Focus on outcomes Get people into good jobs Possibility of waivers

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Minnesota Self-Support Index

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Success: Working an average of 30+ hours per week, or off cash assistance 3 years after baseline, but not if they left due to time limit, sanction

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Thank You

For more information:

Elizabeth Lower-Baschelowerbasch@clasp.org202 906-8013

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www.clasp.org1200 18th St, NWSuite 200Washington, DC 20036